Amidst the political demand for higher taxes, more government spending, bailouts and centralization schemes by the US and Europe, China seems going on the opposite way and appears to be making a step in the right direction: by relaxing currency controls
From Bloomberg,
Chinese Vice Premier Li Keqiang unveiled the biggest package of measures supporting Hong Kong’s economy since the 2003 SARS epidemic, allowing more two-way investment in shares and sparking a rally in brokerage stocks.
China will start an exchange-traded fund based on Hong Kong equities, Li, the front-runner to replace Wen Jiabao as premier in 2013, said at a forum in the city today. He also pledged a 20 billion yuan ($3.1 billion) quota for qualified companies to invest in domestic Chinese securities and said sales of yuan bonds in the city will be expanded.
The plans relax restrictions on investment flows, bolstering the city’s role as a financial hub and aiding an economy that shrank in the second quarter for the first time since 2009…
Making the announcements in person, with the heads of the central bank and commerce ministry, was “a symbolic demonstration of Beijing’s commitment to Hong Kong,” said Kwok. The quota for qualified foreign institutional investors is a yuan-settled version of an existing program settled in dollars, she said.
China will expand its companies’ offshore bond sales and support the use of yuan for foreign direct investment in the nation, Li said. The city’s status as a financial center “is crucial for Hong Kong’s development,” he said.
I hope to see more of this not only for China but for the rest of Asia, including the Philippines.
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